Problem 11-6 NPV Your division is considering two projects with the following ca
ID: 2797774 • Letter: P
Question
Problem 11-6
NPV
Your division is considering two projects with the following cash flows (in millions):
What are the projects' NPVs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
Project A $____ million
Project B $ _____ million
What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
Project A $____ million
Project B $________ million
What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
Project A $ ___ million
Project B $ ___ million
What are the projects' IRRs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A ____ %
Project B ____ %
What are the projects' IRRs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A ____ %
Project B ____%
What are the projects' IRRs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A ___ %
Project B ___%
If the WACC were 5% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 3.86%.)
Proect A/ Proect B /Neither / Both
If the WACC were 10% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 3.86%.)
Proect A/ Proect B /Neither / Both
If the WACC were 15% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 3.86%.)
Proect A/ Proect B /Neither / Both
0 1 2 3Explanation / Answer
1)
What are the projects' NPVs assuming the WACC is 5%
Project A=-20/1.05^0+5/1.05^1+9/1.05^2+12/1.05^3=3.29 million
Project B=-13/1.05^0+8/1.05^1+7/1.05^2+3/1.05^3=3.56 million
2)
What are the projects' NPVs assuming the WACC is 10%
Project A=-20/1.10^0+5/1.10^1+9/1.10^2+12/1.10^3=1.00 million
Project B=-13/1.10^0+8/1.10^1+7/1.10^2+3/1.10^3=2.31 million
3)
What are the projects' NPVs assuming the WACC is 15%
Project A=-20/1.15^0+5/1.15^1+9/1.15^2+12/1.15^3=-0.96 million
Project B=-13/1.15^0+8/1.15^1+7/1.15^2+3/1.15^3=1.22 million
the above are answer
please not that we only do one complete part as per Chegg rule.